Deduct property interest from your Luxembourg tax return!

The interest on a mortgage of your Luxembourg tax return can be deducted. The deductible amount may vary depending on the situation, whether the building is already occupied by the owner or not.

Indeed, if the building is not not yet occupiedthe property interest may be fully deductible from the tax return until the taxpayer moves into the home.

On the other hand, the deduction of property interest becomes capped if the building is occupied by the taxpayer. These are determined according to the date of occupation of the building.

Thus, the following limits apply to the tax return in Luxembourg since 2017:

During the year of occupancy then for the 5 subsequent yearsthe property interest may be deducted up to €2,000. The Next 5 yearsyou can deduct 1,500 from the tax return then, thereafter, 1000€ of real estate interest liabilities will be deductible.

For each person in the household, the ceiling will be increased by its own amount.

In order to better understand, we propose two examples:

Example 1:

On 6 May 2017, two spouses bought a detached house with their two children who were still minors. They took out a mortgage to finance their house on 6 May 2017, which resulted in an interest charge of €9500. Since that day, they have occupied their house.

In this case, the maximum deductible property interest will be : 4 x 2000€ = 8000€.

Example 2:

A family of 3 takes out a loan at the beginning of 2020 to finance their house. This loan generates interest of €14,000. The family moves into their newly built house on 30 June 2020.

Thus the deductible property interest: €12,980.83 (€6,980.83 + €6,000)

• 1^er January 2020 - 1^er July 2020 (182 days): 14.000€ x 182/365 = 6.980,83
• 02 July 2020 - 31 December 2020 (183 days): €2,000 x 3 = €6,000

Property interest deduction is child's play with taxx.lu!

To declare your home loan on your Luxembourg tax return, form 100, go to the "Tax situation" form on taxx.lu. Then simply tick the appropriate box in the "Real estate in 2020" category.

After that, fill in the "Real Estate" form which will allow you to deduct the real estate interest. All the necessary information can be found on your bank's annual certificate.

Simply enter the date you moved in on taxx.lu if you occupy your property during the year. The system will then automatically calculate the amount deductible from the Luxembourg tax return, according to the pro rata rule.